As from 5 January 2009, I shall be with the London office of Sedgwick Detert Moran & Arnold LLP. I used to work with Mark Chudleigh a few years back, we got together over coffee a while back and things gelled.

I’m having some time off with family in the Philippines in the meantime, so I’ll sign off now and wish everyone a Merry Christmas and a Happy and Prosperous New Year.

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One of the passengers posted only-just-after-event messages (tweets) on Twitter about his experiences - a fine example of Web 2.0 almost operating on the Other Side.

“Holy fvcking sh1t I was just in a plane crash!” conveys a certain immediacy, I think. Poor soul couldn’t even get a drink at the bar afterwards!

Thanks to Bruce Carton for the steer.

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“Made-up Madoff News”, via anonymous e-mail.

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The FT had an interesting piece about flooding on 16 December. The surprising thing to me was that about 40-60 per cent of flood-related claims are from damage to properties in areas away from main rivers and involve surface flooding and questions of drainage.

Insurers are hampered in analysing this area as closely as they might like because of a lack of reliable data going back much beyond about 40 years.

The FT piece also comments on the flip side:

While most of the emphasis when it comes to insurance has been on flooding, severe water shortages also present challenges for insurers. Droughts and heat waves, for example, can lead to an increase in fire-related claims for general insurers.

Mr Wallace [of RSA] says that while water scarcity is not yet a major issue for insurers, it is beginning to create challenges for other sectors, such as the drinks industry. There could be some implications for insurers if they write policies that protect against companies being unable to trade.

Not sure why the drinks industry is singled out — most likely because they need large quantities of water to make their products, but I guess you could see a rise in claims if people had to turn to beer instead of water. Perhaps.

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They also think nano-tech is going to bite insurers.

I’d agree with fraud.

Longer term, I think the environment is going to be an issue — it already is, obviously — but I think the market will find ways to deal with that.

NOTE: Munich Re say that they expect that insurance products for “new” liability risks will emerge in the future, possibly covering risks such as failure to warn/report/inform, conspiracy, wrong reaction to emergency situations and even improper claims handling. They also comment that the question of whether claims emerge through general liability or product liability insurance may continue to evolve and may become more frequent. “Such covers are intended to extend only to emissions caused by fortuitous events and not to emissions caused in the normal course of operations or due to wilful action.” They also say note that what is considered “normal” may call for redefinition by the courts and in corporations’ code of conduct regarding energy and environmental practices.

Terrorism? Hmm, not sure about that since it’s pretty easy and standard to exclude it.

What about product recalls? Again, I’m not sure that I see why there should be an increase there all of a sudden, unless they are linking it to nano-tech, but even then I’m sceptical about whether nano really is going to be the horror that many are talking it up to be at present. I’m writing a paper on the issue at present, and the gossipy press is full of half-truths and junk science, which makes for a less than convincing case.

I’ll put the ‘nano-review’ up when done.

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In Pratt -v- Aigaion Insurance Company [2008] EWCA Civ 1314, the Court of Appeal held that insurers were not entitled to rely on a warranty to decline indemnity. Rather, their Lordships said, one must look to what a reasonable man would have understood the parties to mean by the clause in the situation they were in at the time of the contract.

Mr Pratt owned a trawler which suffered fire damage while berthed. At the time, no crew were on board. The insurance contract with Aigaion warranted

“Owner and/or Owner’s experienced skipper on board and in charge at all times and one experienced crew member”.

Insurers argued that the terms of the warranty were unambiguous, there had been a breach and hence they were entitled to decline cover; the owners said that this interpretation ignored the fact that the clause plainly applied only to periods when the vessel was navigating or working and, if applied literally, would lead to absurd results.

At first instance, Mackie J found in insurers’ favour and refused leave to appeal. Sir Paul Kennedy did give leave, saying “the words ‘at all times’ cannot have been intended to be read literally”.

Sir Anthony Clarke, the Master of the Rolls, noted that “any clause in a contract must be construed having regard to its context within the contract, which must in turn be set out in its surrounding circumstances or factual matrix”, and cited Hoffman LJ’s comments in ICS -v- West Bromwich Building Society [1998] 1 WLR 897: “The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean”.

While there is no conceptual limit to what might be relevant, the emphasis should be on the conventional above the fanciful (Hoffman LJ in BCCI -v- Ali [2001] UKHL 8), and the commercial over the literal (Steyn LJ in Sirius Insurance -v- FAI [2004] UKHL 54). Attention is to be placed on the actual language used, applying the ‘ordinary’ meaning of the words in question while bearing in mind the sometimes inevitable use of specialist vocabulary (Mustill LJ in Charter Re -v- Fagan [1997] AC 313).

Their Lordships found for Mr Pratt. While accepting that the court “must not invent a new bargain for the parties”, Sir Anthony found that “the underlying purpose of the warranty…was to protect the vessel in circumstances in which at least two members of the crew…could be expected to be on board.”

Those circumstances, Sir Anthony held, were probably when the vessel was navigating, manoeuvring and perhaps landing her catch, and this was a necessary qualification to the “at all times” on which insurers pinned their case. How far that qualification went was open to question, but the clause must then be decided contra proferentem, i.e. in this case against insurers.

Reinforcing the main judgment, Stanley Burnton LJ noted that the incorporated trawler wording provided cover in circumstances where it would be unlikely or impossible for any crew to be on board, such as when the vessel was in a shed or being dismantled. That, of itself, indicated that “at all times” cannot have meant “at all times” stricto sensu.

For insurers, the message is clear. While the courts will look to the words of the agreement, they are concerned above all with giving effect to the true intentions of the parties. In a clash between the two, the latter will prevail.

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I’m working on a couple of docs that have got to about the zillionth revision stage now, and wanted to print off the latest draft just showing Mr X’s amendments. Simple enough (once the Boy Wonder had shown me ;-) ).

1. Load up the Reviewing Toolbar
2. Go to ‘Show’
3. Go to ‘Reviewers’
4. Pick the one(s) you want
5. er, that’s it

That instantly reduced a 73 page document in a confusing multitude of colours and underlinings to a 42 page doc in black with some green markings from that reviewer.

I can see a lot of use for this.

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[B]ecause Madoff is thought to have run a Ponzi scheme, investors could get money back from other Madoff investors who already took money out,” said Brad Alford, who runs Atlanta-based investment adviser Alpha Capital Management LLC.

The bankruptcy court charged with the similar Bayou case held this year that investors who had pulled their money out of Bayou had to pay to give back profits — sometimes even some of their initial investments — to help offset losses by other duped investors.

The innocent paying for the sins of the guilty. A leitmotif for our times.

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Better give your lawyer a really thorough look over when you get your next bill.

(Source: The Times)

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The Solicitors Disciplinary Tribunal ruled that they entered into a “sham” arrangement with the UDM, failed to act in the best interests of their clients, failed to give adequate advice and improperly released confidential information about clients.

In thousands of cases, they also sliced money from the damages awarded to individual claimants. Some deductions were kept as a “success fee”.

The Solicitors Regulation Authority said the charges were “aggravated by the scale and sophistication of their operations, the sums of money involved, the length of time over which the misconduct occurred and the vulnerability of the persons affected”.

Beresfords say: “We would like to reassure all of our clients that the firm will continue to act in the best interests of our clients.” [emphasis added].

Naturally.

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